Thread
I started dabbling in real estate investing 20 yrs ago
- I bought/sold ~10 single families, condos, multi-units
- Primary residence, rentals, timeshares, new & old
- I lost big during the 2008 crash
I finally hit a grand slam!
Here’s what I know now that I wish I knew then 🧵👇🏻
- I bought/sold ~10 single families, condos, multi-units
- Primary residence, rentals, timeshares, new & old
- I lost big during the 2008 crash
I finally hit a grand slam!
Here’s what I know now that I wish I knew then 🧵👇🏻
Step 1: Build a stomach for a longer-term horizon.
As immigrants, we grew up in a 2 bed/1 bath condo.
I hated how small it was. But my folks saved a lot…
…to pay for private school & college for my bro & me.
It taught me how to sacrifice today for tomorrow.
As immigrants, we grew up in a 2 bed/1 bath condo.
I hated how small it was. But my folks saved a lot…
…to pay for private school & college for my bro & me.
It taught me how to sacrifice today for tomorrow.
Step 2: Own >50% (e.g., control your destiny)
My worst real estate $ was as a minority owner.
I went into a multi-unit residential rental w/ 10+ others.
The lack of info, control & liquidity was unnerving.
I ended up losing over half of my capital. Never again.
My worst real estate $ was as a minority owner.
I went into a multi-unit residential rental w/ 10+ others.
The lack of info, control & liquidity was unnerving.
I ended up losing over half of my capital. Never again.
Step 3: Know your limitations
I’m not handy. No fixer-uppers… only new construction.
I’m time-limited. I need great partners.
I’m not omniscient. I only invest in markets I know well.
I have a clear niche and I’ve learned to stay in it.
I’m not handy. No fixer-uppers… only new construction.
I’m time-limited. I need great partners.
I’m not omniscient. I only invest in markets I know well.
I have a clear niche and I’ve learned to stay in it.
Step 4: Invest like a superconsumer
I invest in Hawaii & Chicago where I’ve spent decades.
But my real advantage is in Hawaii…
…where I’ve been both resident & tourist (renter).
Specifically, the big island…zipcode 96738.
Best benefit/value arbitrage in the islands IMHO.
I invest in Hawaii & Chicago where I’ve spent decades.
But my real advantage is in Hawaii…
…where I’ve been both resident & tourist (renter).
Specifically, the big island…zipcode 96738.
Best benefit/value arbitrage in the islands IMHO.
Step 5: Go to the future and come back
Based on my analysis, the big island has:
- Growing number of direct flights
- Most agriculture = best, freshest produce
- Largest island, lowest density (perfect for post C19)
The big island will look like Maui eventually in 20 years..
Based on my analysis, the big island has:
- Growing number of direct flights
- Most agriculture = best, freshest produce
- Largest island, lowest density (perfect for post C19)
The big island will look like Maui eventually in 20 years..
Step 6: Look at an investment as both a consumer…
I rented every possible type of place at all prices.
I read every review for all the places.
I made a Venn diagram of what mattered to us…
…and five-star reviews.
I rented every possible type of place at all prices.
I read every review for all the places.
I made a Venn diagram of what mattered to us…
…and five-star reviews.
Step 7: …and as an investor as well
I built a spreadsheet of comparable places.
I scraped @vrbo for price & utilization by week.
I estimated price elasticity curves…
…and laid out yield/purchase price ‘what if’ scenarios.
I knew what price range to stay within.
I built a spreadsheet of comparable places.
I scraped @vrbo for price & utilization by week.
I estimated price elasticity curves…
…and laid out yield/purchase price ‘what if’ scenarios.
I knew what price range to stay within.
Step 8: We chose an awesome property manager.
Having been renters, we knew the property managers well.
One stood out as the ideal combination of…
…smarts, responsiveness, service, experience & integrity.
They were the secret weapon.
Having been renters, we knew the property managers well.
One stood out as the ideal combination of…
…smarts, responsiveness, service, experience & integrity.
They were the secret weapon.
Step 9: Differentiation matters
New construction offered 3-4 bedrooms.
We added a 5th bedroom.
This made us a premium to our neighbors…
…& a bargain vs. the ultra-luxury market.
We added a mini gym with a @peloton…
…to make it the perfect place for introverts.
New construction offered 3-4 bedrooms.
We added a 5th bedroom.
This made us a premium to our neighbors…
…& a bargain vs. the ultra-luxury market.
We added a mini gym with a @peloton…
…to make it the perfect place for introverts.
Step 10: Manage expectations
It took longer & more $ than expected (about 2x)
I looked hard at the worst-case scenario & got comfy with it
- A negative cash flow scenario = a tax write off
- Provided data for future relocation
- It was great family memory making with our teens
It took longer & more $ than expected (about 2x)
I looked hard at the worst-case scenario & got comfy with it
- A negative cash flow scenario = a tax write off
- Provided data for future relocation
- It was great family memory making with our teens
Conclusion: Timing is everything
Everything came together & the home was a grand slam
- Net ~5% yield after expenses
- Appreciated in value >25% per year
- Gives us a great free place to vacation
Everything came together & the home was a grand slam
- Net ~5% yield after expenses
- Appreciated in value >25% per year
- Gives us a great free place to vacation
But we got in at the right time & had a lot break out the way.
Excited to keep tinkering & learning!
Excited to keep tinkering & learning!
